Kinn v. Alaska Sales & Service, Inc.

144 P.3d 474, 2006 Alas. LEXIS 149, 2006 WL 2789375
CourtAlaska Supreme Court
DecidedSeptember 29, 2006
DocketS-11748, S-11768
StatusPublished
Cited by12 cases

This text of 144 P.3d 474 (Kinn v. Alaska Sales & Service, Inc.) is published on Counsel Stack Legal Research, covering Alaska Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kinn v. Alaska Sales & Service, Inc., 144 P.3d 474, 2006 Alas. LEXIS 149, 2006 WL 2789375 (Ala. 2006).

Opinion

OPINION

FABE, Justice.

I. INTRODUCTION

This appeal arises from an arbitration decision regarding the sale of two lots of land used for an automobile dealership in Wasilla. After purchasing the lots and the dealership located thereon from Jerry Kinn and Charles Singletary, Alaska Sales and Service brought an action against them on the grounds that the property was contaminated. The arbitrator partially rescinded the contract and awarded additional damages and attorney’s fees to Alaska Sales and Service. Kinn and Singletary appealed the arbitrator’s decision to the superior court, alleging that there was “evident partiality” on the part of the arbitrator, and that the arbitrator exceeded his powers by partially rescinding the contract. The superior court affirmed.

Both parties now appeal the superior court’s decision. Kinn and Singletary contend that the superior court committed four reversible errors: (1) holding that the arbitrator was not biased; (2) affirming the partial rescission of the contract; (3) issuing a final judgment under Alaska Civil Rule 54(b) while their claims against other parties were still pending; and (4) requiring certain future claims related to the dispute to be brought before the arbitrator. Alaska Sales and Service does not challenge the holdings regarding partiality and rescission, but it claims that the superior court erroneously decided four minor issues that should have been remanded to the arbitrator: (1) the amount of attorney’s fees; (2) the rate of postjudgment interest; (3) the method of tender of the rescission deed; and (4) the appropriate form of the rescission deed. For the reasons set forth below, we affirm the superior court’s decision on all issues.

II. FACTS AND PROCEEDINGS

A. Background

1. Kinn and Singletary’s acquisition of the property

The property at issue consists of an automobile dealership, Valley Motors, Inc., and two underlying parcels of land. According to Kinn, he and Singletary purchased the two lots, as well as eighty percent of the dealership’s stock, with an option to purchase the remaining twenty percent from Richard Ha-gen in June 1995. In a third-party claim against Hagen, Kinn and Singletary assert that “Hagen represented that there were no violations of environmental laws or regulations, nor any liability for environmental damages and that the modifications made to the building and other structures, and the oil recovery tank located on and sold as part of the Property, were built and installed in compliance with all applicable codes, laws and regulations.” The septic systems, oil-water separator, and underground oil recovery tank were allegedly installed by Hagen. For the next five years, Kinn and Singletary owned the property as tenants in common and were shareholders in Valley Motors, Inc. Kinn claims that he “did not personally have any knowledge regarding the condition of the property.”

2. Alaska Sales and Service’s purchase of the property

In December 2000 Kinn and Singletary entered into a “Contract for Sale of Real Property” and an “Asset Purchase Agreement” with Alaska Sales and Service. The former provided for the sale of the two lots underlying the dealership, and the latter provided for the sale of the dealership itself. Kinn and Singletary claim that Alaska Sales and Service originally sought to purchase only the dealership, but that they refused to *479 sell the dealership without also selling the land.

3. Alaska Sales and Service’s discovery that the property was contaminated

Several months after acquiring the land, Alaska Sales and Service discovered that the property had been contaminated by used motor oil, which had overfilled the underground tank, migrated through the oil-water separator, and contaminated the septic system. There were also illegal surface spills, some of which the arbitrator found that Singletary attempted to conceal. 1 The Alaska Department of Environmental Conservation and the federal Environmental Protection Agency had not been notified of, and did not approve, the design of the oil and septic system.

After discovering that the property was contaminated, Alaska Sales and Service requested that Kinn and Singletary “take all necessary actions to immediately resolve the problem! ]” and sought to be indemnified for expenses associated with the contamination. These demands, and Alaska Sales and Service’s subsequent request to rescind the contract, were rejected.

B. Proceedings Before the Arbitrator

1.Alaska Sales and Service’s lawsuit

In December 2002 Alaska Sales and Service brought an action against Kinn and Sin-gletary, asserting a number of claims, including misrepresentation and breach of contract. Alaska Sales and Service’s complaint also sought enforcement of the real estate contract’s arbitration provision, and in March 2003 Kinn and Alaska Sales and Service agreed to arbitration. 2 Singletary did not sign the stipulation regarding arbitration, but he was a party to the original contract providing for arbitration. Kinn and Singletary brought a third-party claim against Hagen in May 2003, but this claim was not included in the arbitration. The arbitrator who heard the case was Paul Davis, an Anchorage attorney.

2. Factual findings regarding contamination

The dispute was arbitrated in 2003, and the arbitrator issued findings of fact, conclusions of law, and a final award. He subsequently issued supplemental findings of fact and conclusions of law, a revised final award, and a summary of all awards. The initial findings of fact stated that both lots had been contaminated in violation of federal and state environmental laws, and that Kinn and Sin-gletary had “intentionally misrepresented substantial and material historical environmental events that Mr. Singletary had direct, personal knowledge of ... for the purpose of causing [Alaska Sales and Service] to enter into the transactions.” The arbitrator further found that both the real estate contract and the asset purchase agreement contained misrepresentations about whether the property was contaminated, and that Alaska Sales and Service reasonably relied on the misrepresentations.

In addition to liability under contract, the arbitrator found that each of the defendants had violated AS 46.03.822(a), which imposes strict liability for the costs “resulting from an unpermitted release of a hazardous substance.” As the arbitrator’s opinion noted, “the actions of Mr. Singletary in directing employees to shovel up the oiled gravel, place it into opaque bags, deposit[ ] the bags at the dump and replac[e] the removed gravel with clean gravel taken from a river bed repre-sente ] an intentional violation of state, federal, and, probably, local environmental laws.”

3. Allocation of responsibility

The arbitrator found that “Mr. Kinn’s sins were more of omission rather than commission,” but noted that “Kinn and Singletary *480 were equally irresponsible” in their management of the

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Bluebook (online)
144 P.3d 474, 2006 Alas. LEXIS 149, 2006 WL 2789375, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kinn-v-alaska-sales-service-inc-alaska-2006.